"We have clearly put clients' interests first by correcting pricing on some trades that were mispriced because of trading glitches beyond our control," the company said in a statement.
Joe Gordon of Gordon Asset Management near Raleigh, N.C., says one of his clients insisted on buying 1,000 shares at $42. On Monday, in a fit of disgust, the client sold them at $33.
"He decided it was worth a gamble Friday and a stupid decision Monday," Gordon said. "His comment was, 'That's the last time I ever listen to a bunch of know-it-alls at a cocktail party.'"
Before Facebook's public debut, some investors were considering what to do if the stock price doubled the first day. Instead, it closed a paltry 23 cents higher. It tumbled $7.23 the next two days. A week later, it still hasn't begun to recover. It closed Friday at 31.91, down 3.4 percent on the day and 16 percent below its initial price.
One problem was that first-day trading glitches on the Nasdaq stock exchange botched some investors' trades. And in lawsuits, Morgan Stanley is accused of sharing negative analyst reports about the company with a few favored clients.
Such allegations reinforce suspicions that Wall Street is stacked against the small investor. Investors have filed lawsuits, and lawmakers are opening inquiries.
By week's end, investors were shorting nearly 9 percent of Facebook shares available to the public, according to Data Explorers, which tracks stock lending. In shorting the stock, they're betting that the price will fall.
Ken Freeze, who bought 25 shares on the first day at $40.99, was upset by the allegations of Morgan Stanley selectively sharing research ahead of the IPO. But it wasn't enough to make him want to sell Facebook. If the playing field on Wall Street is tilted against the small investor, he figures, it's still the only one available to him.
"The Morgan Stanley allegations just confirm what a lot of investors already suspect," said Freeze, 55, who works in public relations in Martinez, Calif.
He plans to keep his shares, in part because he's still kicking himself for missing out on Google's public offering in 2004.
"I'd rather have my foot in the door and get it squished a little bit," Freeze said, "than not have my foot in the door at all."
But others who missed out on the offering say they're the fortunate ones.
Stefan Pinto expected a rich first-day profit. He planned to buy 100 shares at the $38 initial pricing, then dump them once they hit $70. But his online brokerage told him he didn't qualify for the offering.
"Now, I feel bad for the people who got in," said Pinto, a Los Angeles resident. "At first, I was kind of annoyed, but I think the universe protected me."
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